Although the city manager is being asked to end a policy that allows pension “spiking” by Phoenix police officers and firefighters, no changes are imminent because the city must honor its labor-contract obligations until next fiscal year.
The Arizona Republic reports that the practice of pension spiking has allowed a few senior public-safety retirees to become millionaires by adding the value of some unused benefits into final salary calculations that substantially elevated their annual pension payments.
The practice is prohibited for most other city employees, but was put in place at least a decade ago by city management for police officers and firefighters, according to the Republic.
“We want to end any of the abuses in the system,” Phoenix Mayor Greg Stanton said.
Stanton said he wants to change the practice through labor negotiations that will begin later this year between City Manager David Cavazos and public-safety unions.
A police-union official said if the city takes away pension benefits, then Phoenix must increase other forms of compensation for public-safety officers.
The firefighters’ union president said upper-level managers are typically the ones receiving the large pensions, which puts rank-and-file employees in a negative light with the public.
The city allows public-safety officers at the end of their careers to cash in unused sick leave and vacation, deferred compensation, payment for emergency shifts, bonuses, and vehicle and cellphone allowances, counting all as compensation.
The inflated compensation significantly increases or “spikes” annual retirement benefits and the cost to taxpayers. All public-safety employees are allowed to spike, though the most costly cases have been top managers at the high end of the pay range.